Donna Dong
Research Analyst, Flux
Brent Rises Above $107/bbl
Brent rangebound; Asia burns more coal as LNG tightens; UAE eyes higher output; China refiners cut fuel production
The Jul’26 Brent futures contract has traded in a $1 range this afternoon, from a low of $107.06/bbl at 13:52 BST to a high of $108.39/bbl at 16:24/bbl. Prices are currently printing at $107.56/bbl (17:13 BST, time of writing).
In the news, major Asian LNG importers Japan and South Korea have increased their coal-fired power generation, driven by supply disruptions and higher prices due to the Iran conflict. Japan's gas-fired power output reached its lowest level in two years, while South Korea's declined to a six-month low, according to data from the Japanese Electricity Market Data Hub and the Korea Power Exchange (KPX). Elsewhere, Shell plans to sell its French petrol stations, according to documents shared with employees and suppliers. The company owns about 60 petrol stations on French highways, which are operated by other companies. The company has said that it expects to find a buyer in Q3 and complete a transaction in early 2027. In other news, ADNOC Drilling is prepared to increase the UAE's oil output beyond its 2027 goal of 5mb/d if authorised, according to the company's CFO in an interview with Reuters. CFO Youssef Salem stated, "We're ready to supply any production capacity that ADNOC requires." Last year, Energy Minister Suhail al-Mazrouei said the UAE, which left OPEC on 01 May to avoid production quotas, could raise capacity to 6mb/d if needed. In other news, some independent refiners in China's eastern Shandong province are reducing fuel output due to narrowing margins after the Iran conflict increased crude prices, all while facing low domestic demand and surplus products. These cuts occur despite Beijing's instructions to small refiners, often called teapots, to keep fuel production steady to ensure local supplies during disruptions from the Iran war. Finally, at the time of writing, the front-month (Jul/Aug) and 6-month (Jul/Jan) Brent futures spreads are at $4.10/bbl and $18.30/bbl, respectively.
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